After my ARA "fixed deposit" has been redeemed, what remains is my original investment which I paid $1.00 to $1.32 a share for.Although the offer of $1.78 would mean a 35% to 78% capital gain, I would be losing a very consistent and meaningful source of passive income.

A yearly 5c dividend per share (DPS) gives me a yield on cost of 3.78% to 5% and from a growing business with a very strong balance sheet too.At $1.78 a share, a 5c DPS gives a dividend yield of 2.8% which is still pretty decent considering the fact that ARA pay out only about half of their earnings as dividends.As an investor for income, naturally, I would like to continue receiving dividends from companies such as ARA.

With an impressive full year 2016 performance, I am even more reluctant to let go of my investment in ARA now. So, I have decided not to accept the offer.See presentation slides: HERE.

If the dividend % drops from 6-7% to about 3-4%, only as a result of the increased in price of the stock, would you still hold on to it, assuming market condition and business environment remain the same and the company is still meeting your expectation?

There are many ways of valuing a business. In this instance, for a business with a good potential to grow much bigger, I believe that a 3% yield based on a 50% pay out is reasonable. You might want to read a recent blog post I published: Investing for income and dividend yields.

Understand that you will be rejecting their offer and also not accepting IHC/HMC, may I know what is the possible consequences? Isn't that offer (in the case of IHC) mandatory unconditioned? Vested on ARA/IHC.

Should you vote for or against at the Scheme Meeting? Before you answer that question, here’s what you need to know and understand.

If the Scheme goes through, ALL existing shareholders (even if you have voted ‘No’) will receive a buyout price at $1.78 a share. In exchange, we will no longer have any interest in the company moving forward.

If the majority voted ‘No’ and the Scheme fails, ARA will stay listed and it’s business as usual. However, whenever ARA needs more capital, they may do so again through issuance of Rights or Placement to accredited investors to grow its AUM in the future.

The directors of the Company are pleased to announce that at the Scheme Meetingconvened pursuant to an order of the Court dated 5 January 2017 and held today at Level 3,Summit 2, Suntec Singapore Convention & Exhibition Centre, 1 Raffles Boulevard, SuntecCity, Singapore 039593 at 11.00 a.m., the Scheme Shareholders have, by a majority innumber of Scheme Shareholders representing not less than 75 per cent. in value of theScheme Shares present and voting at the Scheme Meeting, APPROVED the Scheme.

Wisdom to tap on.

Disclaimer

The ideas expressed in this blog should not be construed as an enticement to buy or sell the securities, commodities or assets mentioned. The accuracy or completeness of the information provided cannot be guaranteed. Readers should carry out independent verification of information provided. No warranty whatsoever is given and no liability whatsoever is accepted for any loss howsoever arising whether directly or indirectly as a result of actions taken based on ideas and information found in this blog.